With Papua New Guinea’s mining sector exceeding all expectations in 2025, economists have upgraded growth forecasts for the local economy and the surrounding region.
This has been no ordinary resources boom.
Papua New Guinea’s (PNG) mining sector performed so far above expectations in 2025 that the Asian Development Bank was forced to upgrade its growth forecast – not just for PNG but for the entire Oceania region.
The September update to the bank’s Asian Development Outlook report revealed that the Pacific sub-region’s growth forecast was pushed up from 2.9 per cent to 3.4 per cent, with PNG’s resources sector the primary driver.
Everywhere you look, mining in PNG has delivered exceptional results.
Gold production surged across the country’s major mines during the first half of the year, followed closely by the world gold price, which moved from around $US2700 at the start of the year to an all-time record of $US4200 in October.
The Porgera mine delivered its best half-year result since reopening in 2023, while Lihir, Kainantu and Ok Tedi all exceeded their April projections, capitalising on elevated precious metal prices and various operational improvements.
PNG is now expected to register 9.2 per cent economic growth for 2025.
But as the calendar ticks over into a new year, the outlook becomes more nuanced. Resource output is expected to moderate from 2025’s elevated levels, with growth forecast at 4.5 per cent for in 2026.
The Asian Development Bank notes several factors that will shape the sector’s trajectory in 2026. Global trade uncertainty, foreign exchange management, and what the report describes as “development challenges”, including law and order, all threaten to wind back the hard-won advances.
The question remains as to how PNG can build on the mining momentum of 2025 to create lasting economic benefits across the economy.
Production dream
The scale of PNG’s mining sector outperformance becomes clear when examining the specifics.
During the first half of 2025, the Porgera gold mine in Enga Province achieved production levels not seen since its 2023 reopening, benefiting from the soaring gold price and operational stability following several years of closure.
The mine’s renaissance has been particularly significant given a difficult history, and its first-half output demonstrated that major PNG mining operations can deliver world-class results when conditions align.
Lihir and Kainantu similarly exceeded expectations, with both operations benefiting from mine upgrades and operational improvements that allowed them to capitalise fully on the precious metals price surge.
Ok Tedi, the long-established copper and gold mine in Western Province, maintained robust output throughout the first half of the year, contributing substantially to the overall sector strength.
These were performances that forced the Asian Development Bank to revise its April forecasts upward, acknowledging that “mining output in the first half of 2025 was stronger than expected”.
The liquefied natural gas (LNG) sector delivered its own impressive results, with production growing by seven per cent year-on-year over the first half of 2025. This represented the strongest LNG growth since 2020, driven primarily by the Angore gas field coming onstream and adding meaningful capacity to PNG’s hydrocarbon exports.
Importantly, this growth occurred even as crude oil production moderated during the period, demonstrating the resilience and expansion of PNG’s gas operations.
What made 2025 exceptional wasn’t simply that mines produced more;. it was the confluence of strong production, elevated commodity prices, and improved operational performance across multiple sites simultaneously.
The Asian Development Outlook notes that the high precious metal prices and upgrades at Lihir and Kainantu created conditions in whcih PNG’s mining sector could deliver returns that exceeded even the most optimistic of prior projections.
This combination of factors transformed what might have been a good year into an outstanding one that lifted an entire region’s economic prospects.
Building up the national economy
The mining sector’s performance has delivered benefits that extend well beyond the mine gates, flowing through to government revenues, business confidence and the broader economy in ways that are helping to reshape PNG’s broader fiscal outlook.
Mining revenue growth has proved crucial for government finances at a time when other revenue sources have disappointed. The Asian Development Bank reports that the PNG LNG project has underdelivered on tax revenue, creating an estimated shortfall of 30–40 per cent against 2024 government receipts.
Without the robust performance of the mining sector, this gap would have created serious fiscal pressure. Instead, stronger mining revenue is enabling the PNG Government to reduce the fiscal deficit to 2.5 per cent of gross domestic product (GDP) in 2025 and a projected 3.2 per cent in 2026. Public debt is now expected to decline to 50.5 per cent of GDP in 2025, falling further to 48.8 per cent in 2026. This is a trajectory that strengthens PNG’s fiscal position and improves its sovereign risk profile at a critical time.
Perhaps equally significant has been the transformation in foreign exchange availability. The Asian Development Outlook notes that businesses had previously cited availability of foreign currencies as a “major constraint” on operations, with orders taking up to four weeks to fulfil in 2024. This bottleneck has largely cleared in 2025, with recent reports showing that “some foreign exchange orders are now filled the day they are received”.
This improvement has unlocked business activity across the economy, supporting imports of machinery, equipment and production inputs that companies need to operate effectively.
The improved foreign exchange situation and stronger commodity prices have also benefited PNG’s agricultural export sector. Cash crops including palm oil, coffee and cocoa all gained from higher prices during the first half of 2025, with the improved availability of foreign exchange supporting the import of vital equipment and other inputs. Export earnings from these commodities are expected to continue increasing throughout 2025, supported by price and improved operational conditions.
Business confidence has responded to all of this movement in kind. Recent survey data suggests that private sector confidence has increased over 2025, a marked shift from the constrained environment of previous years.
What goes up…
The performance of 2025 has set a high bar, and the Asian Development Bank’s outlook for 2026 reflects the reality that resource output is expected to moderate from this year’s highs. The 4.5 per cent growth forecast for 2026 – revised downward from the 4.8 per cent projection in April – acknowledges that the confluence of factors that made 2025 exceptional is unlikely to repeat at the same intensity.
Resource output will naturally ease as production returns to more sustainable levels following 2025’s surge. The bank notes that “resource output will likely moderate from the elevated 2025 levels, denting the country’s commodity exports”.
This is not a crisis for a resources-driven economy; however, it does underscore the importance of maximising the benefits from this year’s windfall.
The global trade environment adds another layer of complexity to the 2026 outlook.
The US has implemented tariffs on PNG products, with a base 10 per cent rate rising to 15 per cent from September. But the Asian Development Outlook report notes that “the impact of reciprocal tariffs announced by the US has thus far been milder than expected”. PNG’s major trading partners – including Australia, with a 10 per cent rate, and Japan and the European Union negotiating lower levels than initially announced – provide a relatively favourable external environment for mineral exports. Nevertheless, the report identifies “risks associated with global trade and policy uncertainty” as factors in the downward revision of 2026 growth.
Against this backdrop, the potential final investment decision on the multibillion-dollar Papua LNG project represents a significant upside risk to the current forecasts. The report explicitly notes that the project “could provide a substantial boost to economic activity”, though it adds that “the forecast does not yet include the potential impact of these proposed resource projects”.
Should the project proceed, it would considerably transform the medium-term outlook.
The report also highlights factors requiring attention if PNG is to sustain momentum beyond the current boom. The country’s impending “grey listing” by the Financial Action Task Force could “increase problems for banks maintaining correspondent bank relationships, while also damaging market perception”.
Law and order challenges continue to weigh on the investment environment. While not insurmountable obstacles, these issues do require policy attention to ensure that 2025’s mining success translates into sustained economic development, rather than a temporary spike in a volatile commodity cycle.
PNG’s mining sector has delivered a remarkable performance in 2025, one that has lifted not just the nation’s own economic prospects but those of the entire Pacific region. The 9.2 per cent growth forecast represents real achievement: mines producing at elevated levels, revenue flowing to government coffers, foreign exchange constraints easing, and business confidence rising.
Yet the true measure of this year’s success will be determined by what comes next. As resource output moderates in 2026 and global trade uncertainties persist, PNG faces the challenge of converting this windfall into lasting development gains. The fiscal improvements – including declining debt and a narrowed deficit – provide a foundation, but only if accompanied by the policy focus needed to address challenges around financial sector credibility, law and order, and infrastructure investment.
The mining boom of 2025 has given PNG a valuable opportunity. Whether that opportunity translates into sustained prosperity will depend on decisions made in the months and years ahead.
Decisions about how to invest today’s mining revenues to build tomorrow’s diversified economy.
